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November 3, 2003

Council urges PSC not to 'rush to judgment' on controversial proposed energy mandate

The New York State Public Service Commission (PSC) should await detailed research on the costs, feasibility, and reliability of a proposed energy mandate before making a recommendation on the controversial proposal, The Business Council says.

The Council submitted a brief on Oct. 31 in a PSC proceeding that is expected to lead to a "recommended decision" on the proposed "renewable portfolio standard (RPS)." The administrative law judge overseeing the proceeding has indicated that a recommended decision on the proposal is possible even before studies on these key issues are finished.

The PSC initiated the current proceeding after Governor George Pataki proposed the controversial RPS in his 2003 State of the State message. Specifically, he directed the PSC to develop a standard that would require New York's businesses and consumers to buy at least 25 percent of their electricity from "renewable energy resources" such as solar power, wind, and fuel cells by 2013.

"A recommended decision should not be issued before critical studies are completed with respect to cost, feasibility, and reliability," The Council's brief said. "These matters are far too important to be treated as mere ancillary elements of the deliberations."

"Instead of a rush to judgment that presents the commission with a single up-or-down plan, the ALJ [should] give the commission a range of options" on what standard should be adopted, when, and whether it should be mandatory or voluntary, the brief noted.

New York's businesses and consumers are still paying "hundreds of millions of dollars a year in excess power costs because a similar rush to judgment was made by elected bodies in adopting the now-infamous 'six-cent law,'" the brief said.

That law fixed prices of electricity in many long-term contracts between utilities and generators at no lower than six cents per kilowatt. This eventually required New York's businesses and consumers to pay inflated costs when the the cost of generation fell well below six cents per kilowatt.

"Given the economic burden of New York's already high energy prices, and the enormous cost of the power blackout this past summer, the commercial and industrial business community can only view with alarm a proceeding of this magnitude being rushed toward a decision before feasibility, cost and reliability issues have been clarified," the brief said.

"Even the appearance that cost is a secondary consideration will send shock waves through the business community," the brief noted, adding that the PSC's Feb. 19 order initiating the current proceeding emphasized that the PSC "does not want New Yorkers to be vulnerable to 'price spikes.'"

The fact that the proposal could make the RPS mandatory suggested an underlying belief that consumers would not freely choose renewable sources because the costs are too high, The Council noted. "We fear that costs could be dramatically higher—but we don't know for certain. And neither does the commission."

The brief emphasized several other points about the proposed RPS: